Insight into what one can expect from an IFTA audit, common pitfalls to be aware of, and critical strategies on how to pass an IFTA audit.
IFTA Compliance: Not to be taken lightly
A common issue we regularly advise our clients on is the importance of compliance with regulations as an IFTA (International Fuel Tax Agreement) license holder. This brief article will outline some of the more common issues we have worked to resolve on behalf of IFTA licensees during the past 24 years. IFTA audits, which are a reality for carriers under the program, have the potential to eat away at a carriers profits if their recordkeeping responsibilities are not being met. Missing, incomplete or inaccurate individual vehicle distance records, unsupported fuel purchases and failure to retain unused IFTA decal sets not assigned to qualified vehicles will result in an expensive audit assessment.
Carriers should be aware that:
- credit for provincial/state fuel tax paid on purchases that are inadequately receipted or not documented properly will be disallowed.
- allocation of distance in the absence of adequate records will result in adjustments that may greatly impact the amount of tax due.
- an auditor can impose a standard of 4.0 mpg/1.7 kpl to an entire IFTA fleet for the audit period resulting in a very expensive assessment.
Outside of properly documented fuel and distance data, carriers must also properly document their IFTA decals. Unused IFTA decal sets must be retained for at least four years, from the end of the calendar year, for audit purposes. Many carriers are unaware that a failure to do so can result in tax being assessed for each decal set that in unaccounted for. This means that tax will be due for every missing decal set for the entire audit period, as if that set was attached to an IFTA licensed truck/tractor, except it does not receive credit for any fuel purchases.
With the state of trucking being where it is today, incurring costly assessments because of an unfavorable IFTA audit can quickly eat away at a carriers already razor thin profit margins. Establishing a best in class compliance system that takes into account complete maintenance of all of your tax accounts, permits, authorities and licenses should be a priority for carriers of all sizes.
Is Your Fleet Compliant?
For over 25 years TransReport Services has ensured their clients meet and often exceed the reporting and recordkeeping requirements in order to protect them at audit. For more information on how we work with you to ensure your IFTA fuel tax is accurate, your fleet is compliant and ready for audit, contact us today!